The 10-year Treasury yield topped 3.05 percent for the first time in four years, stocks slumped from two-month highs and the dollar rallied as speculation grew that signs of a firm American economy won’t derail the Federal Reserve from its rate path.
The S&P 500 Index halted a four-day rally, ending a risk-on mood that had propelled equities to the highest since mid-March. Upbeat retail sales data fueled bets the Federal Reserve may raise rates three more times this year, pushing Bloomberg’s dollar index to the highest level of 2018 and sending the 10-year note yield to its highest since 2011. Banks led gains on
US equity benchmarks.
Investors grappled with trade, growth, and geopolitical worries as a risk aversion spread across assets. Rising yields, a stronger dollar and sliding stocks are fast becoming a familiar and uncomfortable cocktail for investors. Now violence in the Middle East, the US-China trade spat, uncertainty on Italy’s government and global growth concerns are helping cement the prevailing sentiment.
European equities were mixed but benchmarks fell in South Korea and Australia earlier, and in Hong Kong after data signaled investment slowing in China. Shanghai shares bucked the declines as the same numbers showed economic momentum broadly holding The euro slid following disappointing German growth data.
Despite the sour mood, established safe-haven assets failed to catch a bid. Gold and the yen dropped, and the Swiss franc weakened.
Elsewhere, the Turkish lira hit a new low, plunging after President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month.
Emerging-market stocks slumped. China plans to send Vice Premier Liu He to Washington for more trade talks. European Union Chief Brexit negotiator Michel Barnier briefs European affairs ministers on the status of talks with the UK. UK Prime Minister Theresa May meets with her Brexit cabinet on Tuesday to discuss plans for a post-withdrawal customs union. US industrial production numbers are due this week.
The S&P 500 fell 0.9 percent in New York. The Nasdaq 100 Index lost 1.4 percent and small caps fell 0.3 percent. The Stoxx Europe 600 Index slipped 0.1 percent. The MSCI All-Country World Index declined 0.9 percent, the first retreat in a week. The MSCI Emerging Market Index sank 1.4 percent, the first retreat in more than a week and the biggest tumble in almost seven weeks. The MSCI Asia Pacific Index sank 1 percent, the largest decrease in almost seven weeks.
The Bloomberg Dollar Spot Index climbed 0.8 percent to the highest in almost 20 weeks on the biggest increase in two weeks. The euro declined 0.7 percent to $1.184.
The British pound dipped 0.4 percent to $1.3507, the weakest in 19 weeks on the biggest dip in two weeks. The Japanese yen dipped 0.5 percent to 110.18 per dollar, the weakest in